Burgess: Opposition to ABLE Motion to Dismiss

7/27/2019 Burgess: Opposition to ABLE Motion to Dismiss

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

BENJAMIN BURGESS, RHONDA )

BURGESS, HEIDI HOWARD, )JOYCE MARTIN, BETH ) CIVIL ACTION NO.

KARAMPELAS, TERRI DACY, )and MICHAEL DACY, individually ) 1:13-cv-02217and on behalf of all others similarly )

situated, ))

Plaintiffs, ))

vs. ))

RELIGIOUS TECHNOLOGY )

CENTER, INC., ASSOCIATION )

FOR BETTER LIVING AND )EDUCATION INTERNATIONAL, )NARCONON INTERNATIONAL, and )

NARCONON OF GEORGIA, INC., ))

Defendants. ))

PLAINTIFFS RESPONSE IN OPPOSITION TO DEFENDANT

ASSOCIATION FOR BETTER LIVING AND EDUCATION

INTERNATIONALS MOTION TO DISMISS

FOR FAILURE TO STATE A CLAIM

Plaintiffs Complaint stems from the Defendants false, deceptive, or

misleading business practices, which Plaintiffs counsel uncovered after filing a

case against Defendants Narconon of Georgia and Narconon International for the

wrongful death of a former Narconon student. That case led to three years of

Case 1:13-cv-02217-SCJ Document 15 Filed 07/23/13 Page 1 of 29


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litigation, extensive discovery, and a local news investigation, all spurred by the

wrongful conduct of the Defendants. As such, Plaintiffs claims arise from years

of research and investigation. Plaintiffs file this response in opposition to

Defendant Association for Better Living and Educations (ABLE) Motion to

Dismiss, showing as follows:

I. INTRODUCTION

Defendant ABLEs Motion to Dismiss amounts to an attempt to

impermissibly heighten the pleading standards applicable to Plaintiffs claims and

evade meaningful litigation. Rather than respond to the legitimate, plausibility

stated allegations of Plaintiffs Complaint, Defendant ABLE contests Plaintiffs

factual allegations and improperly attempts to burden the Plaintiffs with

establishing a reasonable likelihood of success on the merits of their claims.

However, as shown herein, Plaintiffs met the appropriate burden at this stage of

litigation, and Defendants Motion to Dismiss must be denied.

Plaintiffs, Benjamin Burgess, Rhonda Burgess, Heidi Howard, Joyce Martin,

Beth Karampelas, Terri Dacy, and Michael Dacy, filed their Complaint

individually and on behalf of the class of others similarly situated, against

Defendants Religious Technology Center, Inc. (RTC), ABLE, Narconon

International (International), and Narconon of Georgia, Inc. (NNGA),



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asserting claims sounding in fraud, contract, quasi-contract, and negligence, as

well as Georgias Racketeer Influence and Corrupt Organizations (RICO)

statute, O.C.G.A. 16-14-1, et seq.

Plaintiffs and the proposed class members paid money to one or more of the

Defendants to enroll in the Narconon program at NNGA, and to cover costs

associated with books, housing, and related goods and services. (Compl. 31).

The Narconon program was established in 1966 as a drug and alcohol

rehabilitation program based on the writings of L. Ron Hubbard, a science-fiction

writer and the founder of the Church of Scientology. (Id. 38). Narconons

treatment for drug and alcohol addicts is based exclusively on Hubbards writings,

also known as technology or tech. (Id. 41). Narconons proponents believe

that strict adherence to the Hubbard technology alone will completely address the

rehabilitation needs of its patients. (Id. 46). Therefore, patients receive no

counseling or education in drug and alcohol rehabilitation, and the therapeutic

discussion of drugs and their effects is actually discouraged. (Id.).

Defendant ABLE operates as an umbrella group that oversees the drug and

alcohol rehabilitation activities of the Church of Scientology. (Id. 24). ABLE is

responsible for ensuring that programs using Hubbards technology, including

Narconon, meet the Church of Scientologys and RTCs exacting standards. (Id.



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65). To that end, ABLE licenses the Narconon materials to International,

conducts inspections of Narconon centers, and otherwise actively manages the

daily operations of International and NNGA. (Id. at 24, 64-66). International

owns, licenses, operates, and otherwise directs drug and alcohol rehabilitation

services at Narconon centers, including NNGA. (Id. 38). As the parent/licensor

of Defendant NNGA, Defendant International exercises direct control over the

time, manner, and method of NNGAs operations. (Id. 27). Finally, Defendants

ABLE, International, and NNGA are controlled by Defendant RTC, which

oversees Church of Scientology activities and serves as the final arbiter and

enforcer of orthodoxy for all Scientology-related activities and organizations. (Id.

21-22).

Through its websites, marketing materials, advertising, and personnel, the

Defendants have repeatedly made a vast array of false and misleading claims and

employed other deceptive techniques in their dealings with drug and alcohol

addicts and their families. (Id. 74). These misrepresentations pertain to, among

other things: the effectiveness of the Narconon program, which consists of a

sauna and vitamin program and written training routines originally devised to

teach communication skills to Scientologists; Narconons purported success rate;

Narconons connection to Scientology; the certifications of NNGAs staff;



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NNGAs housing and drug-free environment; and the nature of its government

licensing. (Id. 74-105). By reason of their justified reliance on Defendants

false statements and material misrepresentations, Plaintiffs and all class members

suffered actual physical, mental, and economic harm, and they seek restitution,

compensatory damages, and punitive damages. (Id. 170-72).

II. ARGUMENT AND CITATION OF AUTHORITY

A pleading in a civil action must contain a short and plain statement of the

claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). When

reviewing a motion to dismiss, a court, as a general rule, must accept the plaintiffs

allegations as true and evaluate all plausible inferences derived from those facts in

favor of the plaintiff. See Ashcroft v. Iqbal, 556 U.S. 662, 680, 129 S.Ct. 1937,

173 L.Ed.2d 868 (2009) (holding that a court should deny a motion to dismiss

where the pleading asserts non-conclusory, factual allegations that, if true, would

push the claim across the line from conceivable to plausible (quotingBell Atl.

Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929

(2007));Am. Dental Assn v. Cigna Corp., 605 F.3d 1283, 1289 (11th Cir. 2010)

(quoting Twombly, 550 U.S. at 570) (explaining that allegations in a complaint

must contain sufficient factual matter, accepted as true, to state a claim to relief

that is plausible on its face.). A claim is facially plausible when the plaintiffs



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factual allegations allow[ ] the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678.

The basic purpose of the Federal Rules is to administer justice through fair

trials, not through summary dismissals . . . . Surowtiz v. Hilton Hotels Corp., 383

U.S. 363, 373, 86 S.Ct. 845, 15 L.Ed.2d 807 (1966). With this background in

mind, determining whether a complaint states a plausible claim for relief will, as

the Supreme Court has stated, be a context-specific task that requires the

reviewing court to draw on its judicial experience and common sense. Iqbal, 556

U.S. at 678-79.

A. Plaintiffs Have Standing to Bring their Claims

Contrary to Defendants assertions, Plaintiffs have sufficiently alleged

Article III standing. To establish standing, a plaintiff must allege an injury in fact,

causation, and redressability. Miccosukee Tribe of Indians of Fla. v. S. Everglades

Restoration Alliance, 304 F.3d 1076, 1080 (11th Cir. 2002). The required showing

depends to some extent on the stage of the litigation at which the standing issue is

being decided . . . . Id. (citingLujan v. Defenders of Wildlife, 504 U.S. 555, 561,

112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). At the pleading stage, general factual

allegations of injury resulting from the defendants conduct may suffice, for on a

motion to dismiss we presume that general allegations embrace those specific facts



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that are necessary to support the claim. Lujan, 504 U.S. at 561 (quotations

omitted).

In essence the question of standing is whether the litigant is entitled to have

the court decide the merits of the dispute or of particular issues. Allen v. Wright,

468 U.S. 737, 750-51, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) (quotation omitted).

The core component of standing is that [a] plaintiff must allege personal injury

fairly traceable to the defendants alleged unlawful conduct and likely to be

redressed by the requested relief. Id. at 751.

Here, Plaintiffs have alleged, in part, that, after paying money to one or

more of the Defendants to procure drug or alcohol rehabilitation services, they fell

victim to Defendants false, deceptive, or misleading business practices,

including fraudulent misrepresentation, breach of contract, and civil racketeering,

causing them actual physical, mental, and economic harm. (Compl. 31, 34,

111-69). As a result, Plaintiffs seek compensatory and punitive damages. (Compl.

171-72). Through these allegations, Plaintiffs have alleged a distinct and

palpable injury, fairly traceable to the challenged action(s) of the Defendants,

requesting damages that would provide relief. See Allen, 468 U.S. at 751. As

such, Plaintiffs claims, as alleged, provide them with standing.



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In an attempt to minimize its own wrongdoing and evade Plaintiffs

allegations entirely, Defendant ABLE argues that Plaintiffs suffered no injury

because they paid for NNGA program services, which were provided. (Def.

ABLEs Br. in Supp. of Mot. to Dismiss (Def. Br.) at 24-25). Defendant skirts

the true issues raised by Plaintiffs Complaint, proclaiming, No drug and alcohol

rehabilitation program can or does guarantee that an enrolled student will be

cured and never relapse again. (Id. at 25).

However, Plaintiffs have not based their allegations on the Narconon

programs failure to cure its students.1

Plaintiffs have alleged that they were

defrauded and induced by Defendants to devote their money and energy to a

program that was effectively a criminal enterprise, not a rehabilitation program.

As such, this Court should reject as inapposite Defendants reference to cases in

which the plaintiff: did not allege that a product was ineffective; did not personally

experienced a products problems; and did not allege causation of injury. (See Def.

Br. at 23-24).

Defendant also argues that Plaintiffs made no attempt to connect their

injuries to ABLE. (Id. at 22). To the contrary, Plaintiff alleged that ABLE is an

controls the time, manner, and method of Internationals and NNGAs businesses

1Moreover, the effectiveness of Narconons program would be a fact question, not

a basis for dismissal).



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by actively managing their daily operations, which includes conducting inspections

of Narconon centers and creating, licensing, and approving Internationals and

NNGAs marketing materials, by, among other things, conducting inspections of

the Narconon centers, providing technical and financial assistance to individual

Narconon centers, including NNGA, promot[ing] them through nationwide

advertising and government lobbying, and receiving, in exchange, a percentage of

each Narconon centers corrected gross income. (Compl. 24, 69-71).

B. Plaintiffs Sufficiently Pled their Contract Claims

Defendants response to Plaintiffs contract claims is an attempt both to

prevent the people who actually paid for NNGAs rehabilitation services from

seeking any relief for the breach of their agreement, and to artificially distance

themselves from the obligations under that agreement.

1. Breach of Contract (Count Two)

As an initial matter, to the extent Defendant ABLE adopts Defendant

NNGAs arguments as they pertains to Plaintiffs breach of contract claim (see

Def. Br. at 6, n.1), Plaintiffs hereby adopt the relevant portions of their response to

Defendant NNGAs Motion to Dismiss.

In an action for breach of contract, the agreement alleged to have been

breached may consist of multiple documents. See Fisher v. Toombs Cnty. Nursing



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Home, 479 S.E.2d 180, 183 (Ga. Ct. App. 1996). In addition to encompassing

multiple documents, an agreement may encompass implied terms where it is

reasonable and necessary to effect the full purpose of the contract and it is so

clearly within the contemplation of the parties that they deemed it unnecessary to

state. Id. at 184. Thus, for example, where a plaintiff signed a contract to be

financially responsible for the defendant nursing homes services to her husband,

the Georgia Court of Appeals held that the defendant had an implied duty to

inform the plaintiff when her husband was released from the nursing home. Id. at

183-84. Moreover, under Georgia law, an agreement impose[s] upon each party a

duty of good faith and fair dealing in the performance and completion of their

respective duties and obligations, which includes substantial compliance with the

spirit, and not merely the letter, of a contract. Id. at 184.

Here, the contracts entered into by the parties illustrate that the agreement

consisted of multiple documents. For example, the Financial Policy and

Agreement Form, signed by Plaintiffs and others assuming financial

responsibility for the contract, references a separate document, the Student Rules

of Conduct, as part of its refund policy. (See Def. Br., Exh. A at 3-4). The

Financial Policy states, [The Student Rules of Conduct] have been explained to

you and by signing them you have acknowledged that you understand all of these



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rules. (Id. at 4). The Admission and Services Agreement sets forth the

elements and courses of Narconons social educational based drug rehabilitation

program. (Id. at 5). The Admission Agreement also references the Rules of

Conduct, and it is signed by both the Narconon student andthe Financier, i.e.,

Plaintiffs and other class members. (Id. at 5-6). Finally, the Rules of Conduct,

also signed by the Narconon student and the Students Representative, i.e.,

Plaintiffs and the class members, contain provisions regarding NNGAs policies,

including:

Id. at 7.

A review of these documents reveals that Plaintiffs may allege breach of

contract on the grounds alleged in their Complaint. (See Compl. 115-18).

Defendant argues that the contract did not contain guarantees that, inter alia:

NNGA was compliant with applicable laws and regulations; NNGA staff members

were certified in addiction counseling; and NNGA would provide a drug-free



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environment for its patients. (Def. Br. at 7-9). However, both to fulfill its

agreement to provide drug and alcohol rehabilitation and to discharge its duty to

perform in good faith, NNGA was required to comply with the aforementioned

criteria in order to actually and legally treat drug and alcohol addiction. See, e.g.,

Regional Pacesetters v. Eckerd Drugs of Ga., 358 S.E.2d 481, 483 (Ga. Ct. App.

1987) ([W]hatever may be fairly implied by the terms of the agreement is in the

eyes of the law embodied in the agreement. (quotation omitted)). Given that a

defendants compliance with the spirit of contract may be a jury question, see

Fisher, 479 S.E.2d at 184, Defendant ABLEs motion to dismiss on the basis that

there was no breach of the contract is improper.

Finally, although Defendant ABLE was not named specifically in the

documents constituting the agreements at issue (see generally Def. Br., Exh. A),

Georgia courts have held that, where a subsidiary company is being used and

drained of resources by the parent company to improve the position of other

subsidiaries, the issue of whether the parent company and the subsidiary company

are liable for breach of contract should go to the jury. See, e.g., Trans-Amer.

Comms., Inc. v. Nolle, 214 S.E.2d 717, 719-20 (Ga. Ct. App. 1975). Plaintiffs

have alleged that Defendant actively ran each Narconon facility by, among other

things, overseeing the Church of Scientologys secular activities, licensing



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Hubbards material to Narconon International, inspecting Narconon centers,

including NNGA, to check for compliance, providing technical and financial

support to Narconon International, and promoting Narconon through nationwide

advertising and government lobbying. (Compl. 62-66, 69-73). As such,

Plaintiffs sufficiently pled a breach of contract claim against Defendant ABLE.

2. Unjust Enrichment (Count Three)

Contrary to Defendants position, Plaintiffs allegation of a breach of

contract claim does not prevent them from alleging unjust enrichment. See United

Techs. Corp. v. Mazer, 556 F.3d 1260, 1273 (11th Cir. 2009) (Rule 8(d) of the

Federal Rules of Civil Procedure expressly permits the pleading of both alternative

and inconsistent claims.). In the event that this Court determines that Plaintiffs

did not allege a plausible breach of contract claim as to Defendant ABLE,

Defendant would remain liable under Plaintiffs allegation of unjust enrichment.

(See Compl. 119-21).

The theory of unjust enrichment applies when there is no legal contract and

when there has been a benefit conferred which would result in an unjust

enrichment unless compensated. Smith Serv. Oil Co. v. Parker, 549 S.E.2d 485,

487 (Ga. Ct. App. 2001). Defendant argues that Plaintiffs are prevented from

alleging an unjust enrichment claim because there is an express contract with



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NNGA. (Def. Br. at 16-17). However, should this Court determine that the

contract between the parties was unenforceable or did not encompass Plaintiffs

injuries at the hands of the Defendants, Plaintiffs could proceed under the theory of

unjust enrichment.2 See, e.g., Cochran v. Ogletree, 536 S.E.2d 194, 196-97 (Ga.

Ct. App. 2000).

Defendant also argues that any benefit retained by it was conferred by

NNGA, not the Plaintiffs. Defendant cites a case in which the plaintiff failed to

cite to any authority for pursuing an unjust enrichment claim against a third party

who indirectly received a benefit for the proposition that there is no authority

under Georgia law under which Plaintiffs can argue that Defendant was unjustly

enriched. (Def. Br. at 18 (citingBrenner v. Future Graphics, LLC, 258 F.R.D.

561, 576 (N.D. Ga. 2007)). However, inBrenner, the Plaintiffs sought to bring

breach of contract and unjust enrichment claims against a third-party supplier,

Future Graphics, who delivered goods in fulfillment of a business-opportunity

2 In fact, in the case that Defendant cites in support of its argument that Plaintiffsare limited to recovery under the written contract,Brown v. Cooper, 514 S.E.2d

857, 860 (Ga. Ct. App. 1999), the Georgia Court of Appeals rejected the unjustenrichment claim because a third party, not the plaintiffs, conferred the benefit to

the defendant. Plaintiffs here clearly conferred a benefit to Defendants by payingmoney to the Defendants for NNGAs services. As such,Brown v. Cooperdoes

not support the proposition for which it is cited.



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contract between the plaintiffs and a separate company. Brenner, 258 F.R.D. at

565-66.

Defendant ABLE is not a third partyit is an organization that directly and

actively controls the daily operations of NNGA, and handles marketing,

advertising, and lobbying for Narconon centers. As such, and contrary to

Defendants assertion, Plaintiffs alleged that Defendant unlawfully, unjustly, and

directly obtained payment from Plaintiffs, resulting in their unjust enrichment.

(See Compl. 119 (Plaintiffs and the class members paid money to one or more

of the Defendants[.]; 120 (Defendants unlawfully and unjustly obtained this

payment.); 121 (Defendants received income to which they had no legal

right[.]).

3. Detrimental Reliance (Count Four)

Finally, Defendant argues that detrimental reliance is not an independent

cause of action under Georgia law. In Count Four, Plaintiffs alleged that they

reasonably relied on Defendants representations that NNGA patients would

receive drug of alcohol rehabilitation services, that Defendants failed to live up to

those representations, and Plaintiffs were harmed by their reliance on Defendants

promise to perform, entitling them to damages. (Compl. 125). Plaintiffs

admittedly mislabeled this count as alleging detrimental reliance, rather than



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promissory estoppel. See Houston v. Houston, 600 S.E.2d 395, 396 (Ga. Ct. App.

2004) (The elements of a promissory estoppel cause of action are:

(1) defendant[s] made certain promises, (2) defendant[s] should have expected that

plaintiffs would rely on such promises, (3) the plaintiff[s] did in fact rely on such

promises, and (4) injustice can be avoided only by enforcement of the promise.

(alterations omitted)). Should this Court determine that Count Four was

improperly pled, Plaintiffs request the opportunity to amend. See Fed.R.Civ.P.

15(a).

C. Plaintiffs Sufficiently Pled their Fraud Claim (Count One)

Pursuant to Fed.R.Civ.P. 9(b), a party must state with particularity the

circumstances constituting fraud or mistake. The purpose of this particularity

requirement is to alert[ ] defendants to the precise misconduct with which they are

charged and protect[ ] defendants against spurious charges of immoral and

fraudulent behavior. Ziemba v. Cascade Intl, Inc., 256 F.3d 1194, 1202 (11th

Cir. 2001) (quotations omitted). Rule 9s particularity requirements must be read

in conjunction with Rule 8 so as not to abrogate the concept of notice pleading.

Durham v. Bus. Mgmt. Assocs., 847 F.2d 1505, 1511 (11th Cir. 1988). Rule 9 does

not require the plaintiff to explain his entire case, only that he state the actions that



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allegedly constitute fraud. United States v. Gen. Dynamics, 315 F. Supp. 2d 939,

945 (N.D. Ill. 2004).

While Defendant ABLE argues that Plaintiffs were required to provide the

names, times, dates pertaining to Defendants fraud, federal courts have observed

that Rule 9(b)s requirements can be met in other ways. See Brooks v. Blue Cross

& Blue Shield of Fla., Inc., 116 F.3d 1364, 1371 (11th Cir. 1997). A complaint

may meet this requirement by describing the nature of the alleged

misrepresentations, the general time frame, and the parties involved, without

alleging the exact time and particular place of each misrepresentation. See id. at

1371.

In the Parties portion of their Complaint, Plaintiffs provided a time period

for the fraud by specifying when each proposed class representative sought the

services of NNGA. (See Compl. 2, 6, 10, 14, 17). Plaintiffs then alleged eleven

specific fraudulent statements and/or acts made by Defendants. (See Compl.

111). In so doing, Plaintiffs sufficiently alleged the what and when of the

fraud. See, e.g., Stires v. Carnival Corp., 243 F. Supp. 2d 1313, 1319-20 (D.C.

Fla. 2002) (finding that the plaintiffs sufficiently alleged fraud when complaint

included, inter alia, specific misrepresentations and where they occurred).

Likewise, Plaintiffs set forth the relationship among the Defendants as it pertains to



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the perpetrated fraud. (See id. 20-28, 62-73). Plaintiffs have also alleged that:

Defendants RTC, ABLE, and International control the time, manner, and method

of NNGAs operations (Id.); Defendants ABLE, International, and NNGA

misrepresent their connection to the Church of Scientology (Id. 80-81); and

patients are referred to Narconon through purportedly objective Internet and

telephone services that are actually run and/or paid for, in whole or in part, by

International and/or NNGA (Id. 87-89).

Given this factual background, as alleged by Plaintiffs, combined with the

number of ways in which Plaintiffs and the proposed class members have been

defrauded, Plaintiffs complied with Rule 9(b) by providing Defendants with

enough information to meaningfully respond.3 See, e.g., Gen. Dynamics, 315 F.

Supp. 2d at 945 (finding that a qui tam relator alleging fraud was not required to

provide names of employees who allegedly defrauded the government because

those identities were in exclusive possession of employer).

D. Plaintiffs Sufficient Pled their Georgia RICO Claims (Counts Six to Ten)

The Georgia RICO Act was enacted by the Georgia legislature to impose

criminal penalties against those engaged in an interrelated pattern of criminal

3 Plaintiffs also provided support for one of Defendants fraudulent statements,

regarding the Narconon programs success rate, by attaching an emailacknowledging that the 70% success rate quoted to Plaintiffs and class members

was not supported by scientific evidence. (See Compl., Exh. B).



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activity motivated by or the effect of which is pecuniary gain or economic or

physical threat or injury, O.C.G.A. 16-14-2(b), see O.C.G.A. 16-14-5, and to

provide civil remedies to compensate those injured by reason of such acts.

Williams Gen. Corp. v. Stone, 614 S.E.2d 758, 759 (Ga. 2005). The Georgia RICO

Act contains a liberal construction provision, providing that the Act shall be

liberally construed to effectuate the remedial purposes embodied in its operative

provisions. See O.C.G.A. 16-14-2(b).

As an initial matter, Defendant asserts that Plaintiffs failed to allege that its

RICO predicate acts were the proximate, but for cause of their injuries. (Def. Br.

at 12-13). This is completely false. Under the predicate acts of theft by deception,

mail and wire fraud, false statements to a government agency, credit card fraud,

and identity fraud, Plaintiffs have alleged that their injuries were a direct and

proximate result of Defendants racketeering activity. (See Compl. 136, 144,

153, 161, 169). Defendant illustrates its misunderstanding of Plaintiffs burden at

the motion-to-dismiss phase, arguing, Plaintiffs havefailed to show that the

alleged RICO violations were the but for and proximate causes of any injuries

they allegedly suffered. (Def. Br. at 13 (emphasis added)). However, Plaintiffs

are not required to show or prove proximate cause at this phase of litigation they



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are required to pleadit, with all reasonable inferences made in their favor. See

Iqbal, 556 U.S. at 678.

As an additional matter, contrary to Defendants assertion, Plaintiffs are not

required to plead civil RICO claims with particularity if they do not sound in fraud.

See Liquidation Commn of Banco Intercontinental, S.A. v. Renta, 530 F.3d 1339,

1355-56 (11th Cir. 2008) (We now hold that RICO predicate acts not sounding in

fraud need not necessarily be pleaded with the particularity required by

Fed.R.Civ.P. 9(b).). As such, Defendants arguments regarding Rule 9(b) are

insufficient to dismiss Plaintiffs Georgia RICO claims based on theft by deception

and false statements to a government agency. Moreover, because the foregoing,

flawed arguments are the only objections Defendant raises to the predicate acts of

theft by deception and making false statements to a government agency, Plaintiffs

corresponding RICO Claims (Counts Six and Eight), at a minimum, should be

allowed to proceed.

2. Mail/Wire Fraud (Count Seven)

The offenses of mail and wire fraud require that a person: (1) intentionally

participates in a scheme to defraud; and (2) uses or causes the use of the mail or

wires for the purpose of executing the scheme. United States v. Ward, 486 F.3d

1212, 1221-22 (11th Cir. 2007); see also 18 U.S.C. 1343 (Whoever, having



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devised or intending to devise any scheme or artifice to defraud, or for obtaining

money or property by means of false or fraudulent pretenses, representations, or

promises, transmits or causes to be transmitted by means of wire, radio, or

television communication in interstate or foreign commerce, any writings, signs,

signals, pictures, or sounds for the purpose of executing such scheme or artifice,

shall be fined under this title or imprisoned not more than 20 years, or both.).

Plaintiffs have met the requirements to state a Georgia RICO claim based on

mail and wire fraud by alleging, inter alia, Defendants distributedthe [listed]

false statements and/or representations to Plaintiffs and the class members through

the mail, telephone wire facilities, and/or Internet, and Plaintiffs and all class

members were unaware of the falsities of Defendants material statements and

representations, andactually reliedupon those statements and misrepresentations.

(Compl. 142-43 (emphasis added)). On the basis of these allegations alone,

Defendants inaccurate argument that Plaintiffs never specifically state[d] that

they receivedthose allegedly false representations by way of mail or wire must be

rejected. (Def. Br. at 14).

As to Defendants argument that Plaintiffs do not identify a single letter or

email that contained any alleged misrepresentations by ABLE through the mail or

wire, (Def. Br. at 15), Plaintiffs alleged that the Defendants committed the mail



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or wire fraud, and they alleged that Defendant ABLE exercised control over the

time, manner, and method of NNGAs daily operations. As such, given the liberal

construction provision contained in Georgias RICO statute, Plaintiffs sufficiently

alleged a RICO claim based on mail or wire fraud.

3. Credit Card Fraud and Identity Theft (Counts Nine and Ten)

Plaintiffs also properly pled credit card fraud and identity theft as it pertains

to those Plaintiffs who fell victim to this aspect of Defendants fraud: Plaintiffs

Benjamin Burgess, Rhonda Burgess, Michael Dacy, and Terri Dacy. (See Compl.

4, 19). To the extent that Defendant ABLE argues that not all Plaintiffs and

proposed class members were victims of credit card fraud and identity theft, the

Plaintiffs and class members that have been victims of these RICO predicate acts

can be dealt with through the use of subclasses, if necessary.

E. Plaintiffs Sufficiently Pled NegligencePer Se (Count Five)

Plaintiffs have asserted that Defendant ABLE is liable for Defendants

Internationals and NNGAs acts of negligenceper se, due to the level of its

control over International, NNGA, and other Narconon centers. (See Compl.

62-73). For the violation of a statute or regulation to amount to negligenceper se,

Georgia courts look to the purposes of the legislation to determine: (1) whether the

injured person falls within the class of persons it was intended to protect; and (2)



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whether the harm complained of was the harm it was intended to guard against.

Walter v. Orkin Exterminating Co., 385 S.E.2d 725, 728 (Ga. Ct. App. 1989).

For example, in Walter, the court considered state administrative rules

governing pest control companies providing that the companies should, for

example, notify the local fire and police departments before fumigating a

residential or commercial building, and post a watchman after fumigation to

prevent the entry of an unauthorized person. Id. at 726-27. At some point after

the defendant company in Walterfumigated the plaintiffs house, the house caught

fire and burned to the ground. The court determined that the defendants failure to

post a watchman after fumigation, who presumably could have notified the fire

department of the fire when it began, amounted to a claim of negligenceper se

sufficient to go to the jury. Id. at 728-29.

Here, the Georgia Department of Community Health (DCH)4

regulations

provide for minimal requirements for the licensing and inspection of drug abuse

treatment and education programs. Ga. Comp. R. & Regs. 290-4-2-.02. The Drug

Abuse Treatment and Education Act (the Act) authorized DCH to develop and

enforce this regulation, stating that the purpose is, inter alia, to ensure that every

governing body which operates a drug abuse treatment and education program is

4Formerly known as the Department of Human Resources, Office of Regulatory

Services, Healthcare Section.



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licensed to do so[,] and to meet the rehabilitative needs of drug dependent persons

while safeguarding their individual liberties. O.C.G.A. 26-5-1 to -6. The Act

tasks DCH with promulgating minimum standards of quality and service,

encompassing the qualifications of staff, the content and quality of services, the

safety of housing facilities, and the effectiveness of programs. See O.C.G.A.

26-5-5 to -6. The regulations promulgated by DCH, in turn, require, among

other things, that drug and alcohol rehabilitation centers create individualized

treatment, discharge, and aftercare plans, employ clinical and medical directors,

and implement policies and procedures for drug-testing employees and patients.

(See Compl. 101-05).

Plaintiffs and class members believed that they were securing drug and

alcohol rehabilitation services for themselves or other individuals at a facility that

was legally and properly licensed. Defendant NNGAs failure to comply with

Georgia regulations resulted in the failure to safeguard the liberties of its

patients, as required by the Act. See O.C.G.A. 26-5-2. As such, contrary to

Defendants argument, NNGAs negligent acts directly affected injured the class of

persons the Act was designed to protect, in the manner in which the Act was

designed to protect against.



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III. CONCLUSION

For the foregoing reasons, Defendant ABLEs Motion to Dismiss should be

denied. Should this Court determine, however, that Plaintiffs insufficiently pled

the counts of their Complaint, Plaintiffs request the opportunity to amend the

Complaint to cure any perceived deficiencies. See Fed.R.Civ.P. 15(a) (providing

that the court should freely give leave to amend a pleading when justice so

requires).

Respectfully submitted,

HARRIS PENN LOWRY, LLP

/s/ Jeffrey R. Harris

__________________________

JEFFREY R. HARRIS([email protected])

Georgia Bar No. 330315

JED D. MANTON([email protected])


1201 Peachtree Street, N.E.

400 Colony Square, Suite 900

Atlanta, GA 30361

Telephone: (404) 961-7650Facsimile: (404) 961-7651

FRANKLIN LAW, LLCREBECCA C. FRANKLIN

([email protected])Georgia Bar No. 141350

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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26

1201 Peachtree Street, N.E.

400 Colony Square, Suite 900

Atlanta, GA 30361Telephone: (404) 961-5333

Attorneys for Plaintiff



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CERTIFICATION OF COMPLIANCE

Pursuant to the Local Rules of the Northern District of Georgia, the above-

signed counsel certifies that the foregoing document complies with all formatting

requirements of the Local Rules and further certifies that this document is printed

in Times New Roman font, 14-point, pursuant to Local Rule 5.1(C).



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CERTIFICATE OF SERVICE

I hereby certify that I have this day electronically filed the foregoing

PLAINTIFFS RESPONSE IN OPPOSITION TO DEFENDANT

ASSOCIATION FOR BETTER LIVING AND EDUCATION

INTERNATIONALS MOTION TO DISMISS with the Clerk of Court using

the CM/ECF system which will automatically send e-mail notification of such

filing to the following attorney of record:

Cari K. Dawson, Esq.

Daniel F. Diffley, Esq.David B. Carpenter, Esq.

Alston & Bird LLP

1201 W. Peachtree StreetAtlanta, GA 30309-3424

Attorneys for Narconon International

and Association for Better Living and

Education International

Matthew S. Coles, Esq.

Thomas M. Barton, Esq.Coles Barton LLP

150 South Perry Street, Suite 100

Lawrenceville, GA 30046

Attorneys for Narconon International

and Association for Better Living and

Education InternationalEdward H. Lindsey, Jr., Esq.

James T. Hankins, Esq.Goodman McGuffey Lindsey &

Johnson, LLP3340 Peachtree Road NE, Suite 2100

Atlanta, GA 30326-1084

Attorneys for Narconon of Georgia, Inc.

John K. Larkins, Jr., Esq.

William Taylor McNeil, Esq.J.D. Dalbey, Esq.

Chilivis, Cochran, Larkins & Bever LLP3127 Maple Drive NE

Atlanta, GA 30305

Attorneys for Narconon of Georgia, Inc.

John H. Fleming, Esq.

Valerie S. Sanders, Esq.

Stacey M. Mohr, Esq.

Sutherland Asbill & Brennan LLP999 Peachtree Street NE, Suite 2300

Atlanta, GA 30309-3996



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Attorneys for Religious Technology

Center, Inc.

This 23rd

day of July, 2013.

HARRIS PENN LOWRY LLP

/s/ Jeffrey R. Harris

_________________________JEFFREY R. HARRIS

([email protected])

Georgia Bar No. 330315JED D. MANTON([email protected])


1201 Peachtree Street, NE400 Colony Square, Suite 900

Atlanta, GA 30361Telephone: (404) 961-7650

Facsimile: (404) 961-7651

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

Documents

Burgess: Opposition to ABLE Motion to Dismiss